A few weeks have now passed since the publication of the much anticipated Barclay Review of Non Domestic Rates in Scotland. I was away at the time and did not get much sense of how it was received, though did note the headlines about private schools. So, given rates has featured on this blog before, I thought I should have a read. If you want to do likewise then it can be downloaded here.
A couple of points can be made at the outset. Despite its length, it is well written and is a clear read. It is not often you can say that about such reviews. Secondly, it does rather go out of its way to point out its constraints (tax neutral, no re-opening of 2017 issues) and that many respondents wanted to either range outside its brief, or have a good moan (there’s a nice line about the hospitality industry crying ‘woe is me’ probably in their best Frankie Howard, but then being completely unable to come up with any ideas for solutions).
The Review’s recommendations come in three areas. First, reforms to support economic growth; secondly to improve the administration/experience; and thirdly to ensure the fairness (level playing field) of the system/process. I won’t dwell in detail on this but do note the clarion call for improved clarity, consistency, transparency, modernisation etc. that pervades the recommendations. This is to be welcomed, though the side-swipe at the assessors may have ruffled a few feathers.
From a retail and a town centre point of view there are a few key suggestions, and in my view one glaring omission.
The report illustrates clearly the huge burden on the retail sector that rates are. Making the system better will help a little. The Review of the Small Business Bonus Scheme is overdue and there is a very interesting point about learning from Northern Ireland and focusing such a scheme on town centre situations. The suggested reduction of the large business supplement (and the nice nuance of renaming it the large property supplement) to equate to England will please some operators. The extension of Fresh Start to town centres likewise will have some, probably limited effect, as will associated issues for empty properties.
But my real attention was caught by two particular points:
- The ‘glaring omission’ I referred to earlier (though I accept this is an over-statement) is the way the whole digital issue is swept under the carpet/kicked down the road. The Review is adamant that a property tax remains appropriate but by doing so, under its constraints, ignores the digital ‘elephant’. It is covered briefly in Annex C (Annexes are for issues beyond scope or rejected in the main) but it opts out of the problem by simply saying the Scottish Government should in time consider ‘how should the digital economy be taxed?’ and ‘how should they contribute to local services?’. I just hope this is not too late for many bricks and mortar businesses.
- The most interesting (and depending on your viewpoint, disturbing) point is perhaps made in paragraph 4.30. Here in the recommendation on town centres, it recognises that possible primary legislation could “enable councils to impose an additional levy on rates in certain limited circumstances”. The circumstances the Review lays out include a supplement for out-of-town businesses or predominantly online businesses. Such amounts raised would then be used in town centres locally. If thought about fully, such proposals could begin to address a call made in this blog and elsewhere for better spatial policies to focus on town centres (e.g. rates, VAT). I feel it has to go beyond the out-of-town retail operations and online distribution centres mentioned by the Review, in order to reflect the multifaceted reasons for shifting town centres performance. But the basic idea is one that has to be trialled.